The Heihe River is located in the northwest of the country. The river which originates on the northern side of the Qilian Mountain, flows through the north of the Hexi corridor and disappears in the Badan Jiran Desert on the Ala-shan Plateau. The weather in this region is controlled by the continental climate and the Tibet Plateau climate. The Eji-na Oasis in the Heihe River's downstream is generally considered by Chinese ecological scientists to be the main eco-barrier in northern China. Now, economical and ecological issues from these past decades are now urgently right in front of us. In this paper, combined with fieldwork, two Land-sat TM images (1988a and 2000a) and geography information system are used to interpret land use and land cover changes of the Heihe watershed. The results show that the changes have taken place in land use and land cover in the Heihe watershed since 1988. Based on the analysis of eco-environmental effects of each reach, this paper offers some strategies for ecological restoration of Heihe River Basin. Firstly, forest in the upper reaches should be protected to prevent further deforestation. To increase the upper reaches' water conservation ability and to protect its ecological function, the number of livestock must be limited. In the middle reaches of the watershed, no more cropland should be exploited, agricultural structures should be adjusted to utilize the limited water resources and some industries that have high water need or high pollution outputs should be restricted or canceled. Combating desertification should be a matter for urgent attention. In the lower reaches of the watershed, where Eji-na Oasis locates, efficiency of irrigation should be increased, artificial oases should be developed, enhanced, and protected, and environmental restoration should have a high priority on the National Government Agenda Policy.